EU Said to Have ‘Serious Concerns’ on Greece Debt Sustainability

13-Aug (Bloomberg) — European institutions voiced “serious concerns” about Greece’s ability to repay its debt, putting pressure on Germany as the main creditor to offer debt relief as part of the next aid program, documents show.

Greek debt will peak at 201 percent of gross domestic product next year, before dropping to 160 percent in 2022, according to the “baseline” scenario of European institutions in a document obtained by Bloomberg News.

The International Monetary Fund in the past has wanted to see debt levels closer to 120 percent before putting its own money on the line. In talks over Greece’s third bailout, it has rankled Germany by calling for more debt relief.

While the European estimates “point to serious concerns regarding the sustainability of Greece’s public debt,” the document said that problem can be solved without resorting to a nominal haircut.

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